Financial Data and Key Metrics Changes - The company reported adjusted earnings per share of $0.96 for Q1 2025, an increase from $0.89 in the prior year, reflecting a growth of approximately 7.9% [6][7] - Total comparable funeral revenue increased by over $23 million, or about 4%, compared to the prior year quarter [8] - Funeral gross profit increased by about $21 million, with the gross profit percentage rising by 240 basis points to over 24% [10] Business Line Data and Key Metrics Changes - Comparable core funeral revenue increased by $18 million, or about 4%, driven by a 2.5% growth in core average revenue per service and a 1% increase in core funeral services performed [9] - Preneed funeral sales production decreased by $32 million, or about 10%, primarily due to the transition to a new preneed insurance provider [11] - Comparable cemetery revenue decreased by $8 million, or about 2%, with a core revenue decline of $10 million attributed to lower recognized preneed property revenue [12][13] Market Data and Key Metrics Changes - The company anticipates flat to slightly down funeral volume compared to 2024, with average revenue per case growing at inflationary rates [15] - Preneed cemetery sales production is expected to grow in the low single-digit percentage range, resulting in cemetery revenue growth of about 1% to 2% [16] Company Strategy and Development Direction - The company is transitioning from a trust to an insurance-funded preneed model, which is expected to stabilize and grow in the latter half of 2025 [12][16] - The company confirmed its normalized earnings per share guidance range of $3.7 to $4 for 2025, representing a midpoint of 9% year-over-year growth [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales pipeline, indicating a strong outlook for the remainder of the year despite external pressures [34][37] - The company is focused on managing inflationary costs and expects to maintain impressive gross margin percentages in the 32% to 33% range [17] Other Important Information - The company generated adjusted operating cash flow of $316 million in the quarter, exceeding expectations and showing a substantial improvement over the prior year [21] - Capital investments in Q1 2025 totaled $95 million, with $67 million allocated to maintenance capital and $15 million towards business acquisitions [22][24] Q&A Session Summary Question: Can you discuss the cemetery preneed sales production being down? - Management noted that large sales were worse than core production, but they expect a strong pipeline moving forward [32][34] Question: How do you view the impact of tariffs on costs? - Management indicated that they have long-term contracts that protect against immediate impacts and do not expect material effects on guidance [41][44] Question: What drove the increase in funeral volume in Q1? - Management attributed the increase to slight growth in market share and the effects of their strong preneed program [48][50] Question: What is the outlook for preneed funeral volume to insurance? - Management expects the annual premium generated from preneed funeral contracts to be higher than initially thought as they transition to insurance [60][62] Question: How do you see the impact of M&A on funeral volumes? - Management indicated that M&A could contribute 1% to 2% growth, depending on the timing and nature of acquisitions [92][94]

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company is gradually recovering from past challenges, with expectations for a rebound in bottled water market share in 2025 [8] - The company achieved a revenue of 42.896 billion CNY in 2024, a year-on-year increase of 0.5%, and a net profit of 12.123 billion CNY, also up 0.4% year-on-year [4] - The report anticipates a double-digit revenue growth in 2025, driven by improvements in bottled water market share and continued strength in ready-to-drink tea [9] Revenue Performance - In 2024, the revenue from bottled water was 15.952 billion CNY, down 21.3% year-on-year, while ready-to-drink tea revenue was 16.745 billion CNY, up 32.3% year-on-year [4][5] - The company’s other income and gains reached 2.129 billion CNY in 2024, a year-on-year increase of 15.6% [7] Profitability Metrics - The gross margin for 2024 was 58.1%, a decrease of 1.4 percentage points year-on-year, primarily due to promotional activities for bottled water [6] - The net profit margin remained stable at 28.3% for 2024 [7] Future Outlook - The company plans to enhance its product offerings and marketing strategies to strengthen its market position in the ready-to-drink tea segment [8] - The projected net profit for 2025 is 14.130 billion CNY, reflecting a growth rate of 16.6% [10]

Core Insights - The smartphone market in Latin America experienced a year-on-year growth of 9.3% in Q4 2024, marking the sixth consecutive quarter of growth, driven primarily by markets in Argentina, Chile, and Peru [1][2] - Despite the year-on-year growth, there was a nearly 2% decline in smartphone shipments compared to the previous quarter due to brands shipping products earlier in Q3 2024 to prepare for the holiday season [1][2] - The demand for smartphones has increased across almost all Latin American countries, supported by heightened consumer confidence and intensified competition among brands [1][2] Market Dynamics - 4G smartphones remain the primary driver of sales in the region, while 5G smartphones accounted for 38% of total sales in Q4 2024 [1][2] - Major brands like Samsung, Motorola, and Apple lead in 5G smartphone sales, while Chinese manufacturers continue to push 4G models [1] - The competitive landscape is characterized by significant discounts and promotional bundles offered by most smartphone brands during the November to December period [1] Brand Performance - Samsung maintains a leading position in the Latin American market, with a market share approximately 9 percentage points higher than its closest competitor, benefiting from early launches of entry-level models [5] - Motorola saw slight year-on-year growth, primarily due to its performance in lower price segments and aggressive pricing on 5G smartphones, although its market share declined [5] - Xiaomi achieved double-digit growth driven by markets in Mexico, Ecuador, Argentina, and Colombia, becoming the market leader in Colombia, despite a nearly 60% decline in shipments in Brazil's gray market [5] - Apple experienced year-on-year and quarter-on-quarter growth in Brazil and Mexico, largely driven by the new iPhone 16 Pro Max, although older models still represent a larger share of shipments [5] - Honor also saw year-on-year growth, solidifying its position in the region with affordable 4G smartphones, particularly in Peru, Ecuador, and Central America [5]

Investment Rating - The report maintains a "Buy" rating for Budweiser APAC with a target price of HK$11.00, reflecting a potential upside of 27% from the current price of HK$8.66 [1][8]. Core Insights - The report indicates that Budweiser APAC's sales during the Chinese New Year were encouraging, with management stating that shipments to retailers matched last year's levels. The company is expected to achieve mid-single-digit volume growth in 2025, with a 3% increase in the Chinese market [6][13]. - A strategic shift has been announced, focusing on the "Core++" segment rather than ultra-premium products, aiming to enhance market share amidst a challenging macroeconomic environment [7][13]. - The company declared a dividend of $0.0566 per share, with a high payout ratio of 96%, which is expected to support long-term investor returns [7][8]. Financial Adjustments - The target price has been adjusted downwards from HK$11.60 to HK$11.00, while the earnings per share (EPS) estimates for 2025 and 2026 have been slightly increased by 0.7% and 1.9% respectively [2][8]. - Revenue forecasts for 2025 and 2026 have been raised by 2.0% and 3.2% respectively, reflecting better-than-expected recovery in beer sales in China [13][14]. - The normalized net profit for 2025 is projected at $887 million, with an adjusted net profit margin of 13.4% [10][14]. Market Performance - Budweiser APAC's stock has shown a 52-week range of HK$14.08 to HK$6.84, with a market capitalization of approximately $14.75 billion [1][8]. - The report highlights that the company's valuation is currently at a forward P/E of 21.1x for 2025, which is one standard deviation below the average of the past three years [15][17]. Strategic Focus - The management emphasizes that the strategic adjustment does not neglect high-end products but rather aims for a more comprehensive approach to current market conditions [7][8]. - The report suggests that the focus on the "Core++" segment will create significant synergies within Budweiser APAC's overall product portfolio [7][8].